Tax Literacy

It’s tax season, which means it’s also time for tax scams, with numerous online scams that attempt to steal people’s tax refunds, bank accounts, or identities. Last year, the Internal Revenue Service (IRS) estimates it paid $5.2 billion in fraudulent identity theft refunds in filing season 2013. Websense Security Labs reported in 2014 it saw approximately 100,000 IRS-related scams in circulation every two weeks.

This year, we need to be especially careful in light of the Anthem Breach, in which data from approximately 80 million customers was exposed, triggering new phishing attacks offering false claims of credit monitoring services.

Users who have already filed their taxes this season can still be vulnerable to tax-related scams. Many schemes take advantage of users by alleging to have information about the filer’s refund, or noting a problem with the return that was previously filed.

One scam that has already been impacting users this season involves phishing emails claiming to be from Intuit’s TurboTax. The emails prompt users to click on links to verify their identity or update their accounts in an attempt to download malware to the victim’s machine, or steal data such as Social Security numbers or financial information.

Small employers should be aware of changes to the small business health care tax credit, a provision in the Affordable Care Act that gives a tax credit to eligible small employers who provide health care to their employees.

Beginning in 2014, there are changes to the tax credit that may affect your small business or tax-exempt organization:

Small employers may claim the credit for only two consecutive taxable years beginning in tax year 2014 and beyond.

For 2014, the credit is phased out beginning when average wages equal $25,400 and is fully phased out when average wages exceed $50,800. The average wage phase out is adjusted annually for inflation.

Generally, small employers are required to purchase a Qualified Health Plan from a Small Business Health Options Program Marketplace to be eligible to claim the credit. Transition relief from this requirement is available to certain small employers.

The Internal Revenue Service today announced the release of IRS2Go 5.0, an update to the only official IRS smartphone application, compatible with both Apple and Android devices.

Download IRS2Go free of charge for Android devices from the Google Play Store or from the Apple App Store for Apple devices. Use it to check your refund status, watch the IRS YouTube channel, find free tax preparation help, get IRS news as soon as it's released, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs.

“The new version of IRS2Go provides taxpayers another way to quickly get information and help around the clock,” said IRS Commissioner John Koskinen. “The IRS is focused on providing taxpayers with convenient self-service tools like IRS2Go, but it’s important to remind taxpayers to only use official IRS products to safeguard their personal information.”

The Internal Revenue Service has announced the launch of a new, online public directory of tax return preparers.

This searchable directory on IRS.gov will help taxpayers find a tax professional with credentials and select qualifications to help them prepare their tax returns.

“This new directory will be a practical tool for the millions of Americans who rely on the services of a paid return preparer,” said IRS Commissioner John Koskinen. “Taxpayers can also look to these tax professionals for help if they have questions about the new health care provisions on this year’s tax forms.”

The directory is a searchable, sortable listing featuring: the name, city, state and zip code of attorneys, CPAs, enrolled agents and those who have completed the requirements for the voluntary IRS Annual Filing Season Program (AFSP). All preparers listed also have valid 2015 Preparer Tax Identification Numbers (PTIN).

The Affordable Care Act (ACA) contains several tax provisions that affect employers. Under the ACA, an employer’s workforce size is significant because this information determines which provisions apply.

The IRS is conducting an information campaign to educate taxpayers about some of the basics of the ACA. This campaign will include health care tax tips, YouTube videos and expanded ACA web pages on IRS.gov.

Determining Workforce Size

An employer’s size is determined by the number of its employees.

An employer with 50 or more full-time employees or full-time equivalents is considered an “applicable large employer,” or ALE, under the ACA.

For purposes of the employer shared responsibility provision, the number of employees a business has during the current year determines whether it is an ALE the following year. Employers make this calculation by averaging the number of employees they had throughout the year, which takes into account workforce fluctuations many employers experience.

As part of our blog series on tax literacy, MBDA will highlight the latest tax-related news issued by the IRS for business owners. The material presented in this website is not offered as legal or tax advice. You are urged to seek the advice of your tax advisor, attorney, and/or financial planner for any issue related to tax obligations.

This post originally appeared as a IRS Tax Tip

Many people look for help from professionals when it’s time to file their tax return. If you use a paid tax preparer to file your federal income tax return this year, the IRS urges you to choose that preparer carefully. Even if someone else prepares your return, you are legally responsible for what is on it.

Here are ten tips to keep in mind when choosing a tax return preparer:

Check the preparer’s qualifications. All paid tax return preparers are required to have a Preparer Tax Identification Number. In addition to making sure they have a PTIN, ask if the preparer belongs to a professional organization and attends continuing education classes.

Start 2014 off right. Here are some actions to take now or in early January that will help you optimize your tax and financial results for the coming year.

1. Revisit your recordkeeping practices

Records are vital for both business and tax purposes. They help know whether or not you’re profitable and provide key information to help you take business actions, such as adjusting prices, cutting expenses, or raising money.

What’s more, in order to take all the deductions and credits to which your business is entitled in 2014, you’ll need good books and records. Often business owners fail to pay attention to this detail until it’s too late and the IRS is questioning write-offs claimed on a return.

Set up a recordkeeping system that satisfies tax law requirements, and make sure that employees know what to do. Check IRS Publication 583 [pdf] for details on recordkeeping rules for tax purposes. Consider using apps that can help with recordkeeping, such as those for capturing receipts for travel and entertainment expenses. Some may be available for use with, or provided by, your current bookkeeping software or cloud solution.

Business is underway, and you’ve hired some help. You’ll need to take care of employees by making sure that the right tax forms are complete.

One-on-One Help from the Social Security Administration

Employers who need help with general wage reporting information can call the Social Security Administration’s Employer Reporting Service Center at 800-772-6270. For answers to more technical questions, employer service liaison officers are available around the country by calling 800-772-6270.

Other Services

FORM W-2 FILING INFORMATION

Each year, employers must send Copy A of each employee’s Form W-2, Wage and Tax Statement, with one Form W-3,Transmittal of Wage and Tax Statement, to the Social Security Administration by the last day of February (or last day of March if they file electronically) to report the wages and taxes of their employees for the previous calendar year.

Complete wage reporting information and all publications needed to meet their wage reporting responsibilities are now online on the Social Security Online website, Employer W-2 Filing Instructions and Information page.

The Internal Revenue Service recently released an update to their IRS2Go mobile app. One of the new features of the app, available on the Android and iOS platforms, is that it detects whether a user’s device is set to English or Spanish and delivers the app in that language.

Other resources available on IRS2Go include:

Get Your Refund Status. Taxpayers can check the status of their federal refund through the mobile app with a few basic pieces of information. An updated refund status is available 24 hours after the IRS acknowledges receipt of an e-filed return, or four weeks after mailing a paper return.

Get My Tax Record. Taxpayers can now order their tax account or tax return transcript from a mobile device. The transcript will be delivered via U.S. Postal Service to their address of record.

Watch Us. People can view the IRS YouTube videos right on their smartphones. The IRS YouTubevideo channels provide short, informative videos in English, Spanish and in American Sign Language on a variety of tax topics.

Follow the IRS. Taxpayers can sign up to follow the IRS Twitter newsfeeds, @IRSnews or @IRSenEspanol, which provide easy-to-use information, including tax law changes and important IRS programs

Get Tax Updates. Phone app users enter their e-mail address to automatically get simple, straightforward tips and reminders to help with tax planning and preparation. Tax Tips are issued daily during the filing season and periodically throughout the rest of the year.

Get the latest news. With this tool users can quickly access the most recent updates on the IRS.gov English and Spanish news pages

There are three ways you can request an automatic extension of time to file a U.S. individual income tax return: (1) you can electronically file Form 4868 (PDF), Application For Automatic Extension of Time To File U.S. Individual Tax Return; (2) you can pay all or part of your estimate of income tax due using a credit or debit card or by using the Electronic Federal Tax Payment System (EFTPS); or (3) you can file a paper Form 4868 by mail.

If you file your Form 4868 electronically you will receive an acknowledgement or confirmation number for your records and you do not need to mail in Form 4868. If you need to pay additional taxes when filing Form 4868 electronically, you may do so through the outside service provider or through e-file. You can refer to your tax software or tax professional for ways to file electronically using e-file services. Several companies offer free filing of Form 4868 through the Free File program that you can access on the IRS.gov website. If you wish to file electronically, be sure to have a copy of last year's tax return. You will be asked to provide the adjusted gross income (AGI) from the return for taxpayer verification.